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China and emerging Asia: comrades or competitors?

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Author Info

  • Alan G. Ahearne
  • John G. Fernald
  • Prakash Loungani
  • John W. Schindler

Abstract

Do increases in China's exports reduce exports of other emerging Asian economies? We find that correlations between Chinese export growth and that of other emerging Asian economies are actually positive (though usually not significant), even after controlling for trading-partner income growth and real effective exchange rates. We also present results from a VAR estimation of aggregate trade equations on the relative importance of foreign income and exchange rates in determining Asian export growth. Although exchange rates do matter for export performance, the income growth of trading partners matters even more. In addition, we examine specific products and find evidence that a considerable shifting of trade patterns is taking place, consistent with a 'flying geese' pattern in which China and ASEAN-4 move into the product space vacated by the NIEs. Our results suggest that China and emerging Asia are both comrades (overall) and competitors (in specific products).

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Bibliographic Info

Paper provided by Board of Governors of the Federal Reserve System (U.S.) in its series International Finance Discussion Papers with number 789.

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Date of creation: 2003
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Handle: RePEc:fip:fedgif:789

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Keywords: Exports - China ; Exports - Asia;

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  1. Diwan, Ishac & Hoekman, Bernard, 1999. "Competition, Complementarity and Contagion in East Asia," CEPR Discussion Papers 2112, C.E.P.R. Discussion Papers.
  2. Fernald, John & Edison, Hali & Loungani, Prakash, 1999. "Was China the first domino? Assessing links between China and other Asian economies," Journal of International Money and Finance, Elsevier, vol. 18(4), pages 515-535, August.
  3. Maria Socorro Gochoco-Bautista, 1995. "ASEAN-China Economic Relations into the 21st Century," Philippine Review of Economics, University of the Philippines School of Economics and Philippine Economic Society, vol. 32(2), pages 159-170, December.
  4. John Fernald & Hali Edison & Prakash Loungani, 1998. "Was China the first domino? assessing links between China and the rest of emerging Asia," International Finance Discussion Papers 604, Board of Governors of the Federal Reserve System (U.S.).
  5. Anuradha Dayal-Gulati & Valerie Cerra, 1999. "China's Trade Flows," IMF Working Papers 99/1, International Monetary Fund.
  6. Bonin, John P. & Huang, Yiping, 2001. "Dealing with the bad loans of the Chinese banks," Journal of Asian Economics, Elsevier, vol. 12(2), pages 197-214.
  7. Carolan, Terrie & Singh, Nirvikar & Talati, Cyrus, 1998. "The composition of U.S.-East Asia trade and changing comparative advantage," Journal of Development Economics, Elsevier, vol. 57(2), pages 361-389.
  8. Alan G. Ahearne & John G. Fernald & Prakash Loungani, 2001. "Countering contagion: Does China's experience offer a blueprint?," Economic Perspectives, Federal Reserve Bank of Chicago, issue Q IV, pages 38-52.
  9. John Fernald & Prakash Loungani, 2004. "Comrades or competitors? on trade relationships between China and emerging Asia," Chicago Fed Letter, Federal Reserve Bank of Chicago, issue Mar.
  10. Abeysinghe, Tilak & Lu, Ding, 2003. "China as an economic powerhouse: Implications on its neighbors," China Economic Review, Elsevier, vol. 14(2), pages 164-185.
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